The confrontation between the United States and Iran is no longer limited to military strikes or targeting military facilities, but has moved to a more sensitive and influential arena, represented in the confidence of global markets in the future of navigation in the Strait of Hormuz, one of the most important arteries of the energy trade in the world.
While Washington maintains that its military operations are aimed at ensuring freedom of navigation and keeping the strait open, analysts believe that military force alone is not enough to convince shipping companies, insurance companies and energy markets that passage through the strait is safe, which makes the war gradually turn into a "war on economic risks" rather than a traditional military confrontation.
Trust... the missing link
Travis Lynch argues that the administration can send aircraft carriers, launch missiles, and declare its operations a success, but it cannot bind insurers, shipowners, or energy markets to believe that the Strait of Hormuz is safe.
He points out that the strait is practically open only when commercial ships continue to cross normally, insurance companies maintain risk coverage, and energy market dealers are convinced that shipments will arrive on time, without fear of being attacked or disrupted.
Markets measure probabilities, not statements
According to the report, global markets do not react to political statements as much as they rely on assessing risk probabilities. "The higher the likelihood of attack, detention, or military miscalculation, the higher the cost of shipping and insurance premiums."
In this context, Reuters quoted marine insurance companies that have raised the risk level in the Strait of Hormuz to a "very high" level, after the recent series of attacks, and some insurance companies have also recommended ship owners reassess their trips across the strait.
Open Strait... Economically Semi Closed
And while some oil and natural gas tankers continue to use the strait, several shipping companies have begun to reduce or slow movement, while some ships have switched off automated tracking systems (AIS), an indicator that experts see as more important than official statements on navigation security.
The report asserts that the continuation of this behavior means that the markets are not yet convinced by the US messages about restoring deterrence, and that the strait may remain open militarily, but in practice it turns into an economically expensive corridor.
Iran's strategy to raise transit costs
Iran does not need to close the strait entirely or confront the U.S. Navy directly, the writer argues, but rather to turn the passage through Hormuz into an expensive and risky decision.
Just increasing uncertainty about the security of navigation leads to higher insurance and shipping prices, delayed supply arrivals, and higher oil and gas prices, which are later reflected in fuel prices, transportation, and global supply chains.
Implications for the US economy
The report warns that the effects of the crisis will not remain confined to the Gulf, but will reach the American consumer through the rise in the prices of gasoline, diesel, jet fuel and transport costs, which may be reflected in inflation rates and commodity prices.
And he sees any military operation described as “limited” or “defensive” turning in the calculations of the markets into one question: how much risk is in the Strait of Hormuz, and who will bear the cost of crossing?
Military power doesn't make peace
The report concludes that the United States still has the capacity to deliver effective military strikes, but no longer has the same capacity to restore economic and psychological confidence in markets.
Military force may destroy targets, but it cannot force insurers to ignore the risks, or convince shipowners that the strait is no longer a fully secure passage.
He points out that continued market hesitancy, high insurance costs, and slow ship movement mean that the conflict has moved from the battlefield to the budgets of shipping and insurance companies and the global energy markets, where the cost of risk has become the most influential factor in the future of navigation through the Strait of Hormuz.
And these developments put Washington before a new challenge of restoring economic confidence, not just achieving military superiority, because the success of military operations does not necessarily mean the return of stability to one of the most important sea lanes in the world.
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